Australians are skipping holidays this year due to a lack of funds and redirecting what savings they have into the family home, according to survey data from RateCity.
A recent RateCity survey found that almost half of respondents (48 per cent) admitted to not having enough money set aside to holiday in 2021. Only over a quarter (29 per cent) were still hoping to holiday this year, with the remaining 24 per cent admitting to cancelling plans due to COVID-19 restrictions.
It’s safe to assume most Australian’s holiday plans were put on hold in 2020, with the economic impacts of COVID-19 seeing Aussies hold tight to their savings in case of emergency. And despite Aussie savers squirrelling away $124 billion in the year since COVID-19 hit our shores, it seems that we’re not all ready to part with our new nest eggs.
In fact, a majority of RateCity’s survey respondents (61 per cent) said they were redirecting their usual travel budget into their general savings this year.
The next most popular option for Aussies to redirect their travel money into the family home, with items for home (16 per cent) and home renovations (15 per cent) coming in second and third.
This was followed by mortgage repayments (13 per cent) showing that paying off Australians biggest debts is still a priority, even as COVID-19 restrictions ease and the economy enters recovery. These results are unsurprising given that last year one in ten homeowners were struggling to make mortgage repayments.
|Where will you redirect your travel money this year? (Multiple choice)||Percentage (%)|
|A big-ticket item (such as a car or caravan)||12.2%|
|Other travel items (such as camping equipment or fishing gear, etc)||9.3%|
|Items for my home (such as electronics, etc)||16.2%|
|Into my savings||60.7%|
|Into my mortgage||13.3%|
|Towards a house deposit||7.7%|
Source: RateCity Survey 2021. Note: Multiple choice question.
Craig Fenwick, CFO of online lender Alex, said: “Historically, borrowing for travel is often associated with big trips in Australia and overseas.”
“With borders still shut it could be some time before we see people borrowing for their next big overseas trip,” said Mr Fenwick.
“For Alex customers, small renovation loans are popular at the moment. Our competitive risk-based interest rates along with quick turn-around times allow our customers to focus on the new kitchen rather than the loan approval.”
Last month, RateCity reported that 37 per cent of homeowners were planning on renovating this year. Among those renovating, the most common amount to spend was between $5,000 and $25,000.
Sally Tindall, Research Director at RateCity acknowledged this shift to home spending from travel spending, stating that more Australians are taking out loans to pay for renovations.
“In the last year, owner-occupier homeowners have taken out a total of $3.12 billion in loans for alterations, additions and repairs, according to the latest seasonally adjusted ABS data,” said Ms Tindall.
“Working from home has made many people realise they need larger, more functional homes. Many people are finding it is more economical to renovate their own home than to buy and sell, particularly when factoring in costs such as stamp duty,” she said.
RateCity tips for home renovations:
- Budget buffer – try to factor in an emergency buffer into your renovation budget as it’s not uncommon to have blowouts.
- Repay your redraw/offset – If you have a home loan and dip into your offset account or redraw facility to pay for your renovation, it may be worth repaying this money as soon as possible to keep your mortgage repayments down.
- Multiple quotes – Don’t feel you have to stick with the first builder you contact. Aim to get multiple quotes from tradies and suppliers to ensure you’re nabbing the most competitive deal possible.